If Practices Don't Change, EHRs Lose Money

by David Pittman David Pittman,Washington Correspondent, MedPage Today
March 04, 2013

The average physician lost nearly $44,000 over 5 years implementing an electronic health record system, a large pilot study found, but the technology itself was just part of the reason.

Just 27% of practices achieved a positive 5-year return on investment -- a number that would rise to 41% with the addition of federal incentives to use EHRs, the study in the March issue of Health Affairs stated.

But the vast majority of practices lost money because they failed to make operational changes to realize the benefits of EHRs such as ditching paper medical records after adoption, Julia Adler-Milstein, PhD, of the University of Michigan in Ann Arbor, and colleagues wrote.

"Practices with a positive return on investment realized savings by eliminating paper medical records, as well as dictation and billing services and positions of, or hours worked by, staff members who were performing services no longer required after EHR adoption," the authors wrote. "Practices may therefore need encouragement and assistance in changing the way they operate so they can benefit from EHR adoption."

The researchers surveyed practices adopting EHRs through the Massachusetts eHealth Collaborative, a pilot program to help more than 80 ambulatory care practices in three communities in the state. The program was supported by the Massachusetts Medical Society and American College of Physicians and funded in part by $50 million from Blue Cross Blue Shield of Massachusetts. EHRs were implemented between March 2006 and December 2007.

The Health Affairs study sought pre- and post-adoption financial cost/benefit data from practices such as total revenue, total operating costs, and total labor costs. Researchers also asked for information on areas that were impacted by EHRs such as the cost of paper medical records, dictation services, and billing services.

The authors tried to calculate how EHRs impacted the practices' bottom line. "Our aim was to decrease potential over attribution that could result from asking practices to focus exclusively on EHR adoption," they wrote.

Adler-Milstein and co-authors admitted it was difficult to attribute certain savings to EHR adoption. For example, if a practice's revenue increased by $100,000 after EHR adoption, how much of it was because of EHRs? So the authors reported results as sensitivity analyses.

"Factors such as practice attitudes toward the EHR system may have systematically biased attribution in ways that we were unable to address," the authors noted.

Their results showed that the average physician lost $43,743 over 5 years. Primary care practices fared better than specialists.

Practices that saw a positive return on EHR investment increased revenue by more than $114,000 per physician over 5 years, results showed. In comparison, practices with a negative return on EHR investment saw revenue increase by an average of only $9,200 per physician in 5 years.

Even when adding federal incentives to use EHRs, the majority of doctors would have lost money.

With the additional $44,000 from "meaningful use" incentives, more than half of primary care practices would have realized a positive return on investment, compared with a third of specialists, the study found. Doubling the incentive would cause 59% of practices to break even. Tripling it to $132,000 would result in 67% of practices breaking even.

"Meaningful use" refers to provisions in the 2009 Health Information Technology for Economic and Clinical Health (HITECH) Act, which authorized incentive payments through Medicare and Medicaid to clinicians and hospitals that use electronic health records in a meaningful way that significantly improves clinical care. However, recent reports have shown a small minority of physicians qualify for the bonuses from Medicare and Medicaid.

Other results from the study include:

38% of practices with six or more physicians achieved a positive return on investment, compared with 26% of practices with one or two physicians

55% of practices reported a reduction in the cost of paper medical records after EHR adoption

22% of practices reported the most common ongoing cost was additional hours of practice time

10% of practices noted improved efficiency, allowing them to see more patients each day

18% increased revenue through improved billing

Practices with a practice management system in place to help with billing functions before EHR adoption benefited less on average

Wide usage of EHRs was supposed to help doctors increase revenue through improved billing and efficiency gains that would allow them to see more patients per day. However, doctors have complained that EHRs are cumbersome and cause physicians to spend more time documenting patient visits.

"Whether the meaningful-use incentive is sufficient to ensure that practices at least break even probably depends on both the practice setting and the decisions made by practices to organize and deliver care differently after EHR adoption," the authors wrote. "Understanding how to help all practices benefit from adoption is crucial to the success of HITECH and represents an important area for future research."

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